What Are Some of the Disadvantages of Using PayPal?


Quick Answer

Disadvantages of PayPal include potential freezing of accounts, the service's transaction fees, and its long verification process. In the event of disputed payment, PayPal handles the arbitration process, which can take a very long time.

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Full Answer

PayPal is a private company that is not subject to the same federal rules that govern traditional banks; thus, PayPal can block user accounts without their consent whenever it notices a suspicious transaction. The account remains frozen until users provide the required information to verify their identity, thus preventing them from accessing funds already in their accounts. PayPal may also limit the amount of money users can send, receive or withdraw from their accounts.

Unlike most online and bank accounts that charge monthly fees, PayPal charges its users a per-transaction fee and an extra fee for non-PayPal payments. Businesses that sell merchandise on eBay using PayPal may not gain immediate access to their funds since PayPal may put an administrative hold on their payments for several days in case of transaction problems, a history of chargebacks, and the sale of electronics, event tickets and gift cards.

PayPal provides buyers with access to the customer's bank account and may allow unauthorized deductions to take place in case of chargeback agreements. The PayPal verification process takes a few days to complete since it involves making deductions to the client's bank account and waiting for these deductions to reflect in the client's bank statement.

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